TECHNICAL REPORT ON FISP INDEX INSURANCE PRODUCT IMPROVEMENT - SAVING LIVES CHANGING LIVES
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TECHNICAL REPORT ON FISP
INDEX INSURANCE PRODUCT SAVING
IMPROVEMENT LIVES
CHANGING
LIVES
June 2021
REPUBLIC OF ZAMBIA
Summary lessons learned on index insurance in Zambia have
been gained and recorded to inform the expansion
The Ministry of Agriculture, IFAD and WFP, with support of such initiatives.
of the International Research Institute for Climate and
Society (IRI) and financial partners Mayfair, Zep Re In a bid to support Government systems, WFP, with
and ACRE, collaborated on the design of an improved support from the International Fund for Agricultural
index insurance product for the Government of Development (IFAD) under the Adaptation for
Zambia’s Farmer Input Support Program (FISP) for the Smallholder Agriculture Programme - II (ASAP II) and
2021/22 season. the International Research Institute for Climate and
Society (IRI) at Columbia University, has partnered
This improved product incorporates best practices with the Ministry of Agriculture to support the
from both the current FISP insurance product and strengthening of national capacities, systems, and
WFP’s Rural Resilience Initiative (R4) project. A key partnerships with private sector for climate risk
aspect of this “blended” index is incorporating the financing and risk transfer.
perspective of farmers to ensure that the product
accurately reflects local patterns of vulnerability and Within the scope of partnership, the Ministry of
risk. To this end, WFP and IRI supported MoA in the Agriculture, IFAD and WFP agreed to the following:
collection of focus group data from almost 1,000
agricultural camps across the country, the largest • Support capacity building efforts on index
such exercise IRI has ever supported. This data was design
then used by the inter-ministerial technical working • Kick start the activities around improving
group to tune the index, using interactive tools product features of the existing FISP weather
developed by IRI. index product
• Support the formation of a technical inter-
This document presents an update on milestones, ministerial working group on index design
workshops and activities related to the FISP index • Development of a detailed training roadmap
insurance program in 2020/21, as well as a summary for the technical inter-ministerial working
of the inter-ministerial technical working group on group on index design
index insurance recommendations for the 2021/22
index. To this end, WFP and IRI supported the Ministry
of Agriculture in conducting the first ever inter-
Background ministerial working group on weather index design.
The workshop attracted participants from various
In 2014, World Food Programme, in partnership with organizations including Smart Zambia, Remote
the Ministry of Agriculture, launched the R4 smallholder Sensing, Central Statistics Office, Meteorological
support programme with a focus on resilience Department, State Insurance Company, Pensions
across 5 districts (namely Gwembe, Mazabuka, and Insurance Authority (PIA), Professional Life
Monze, Namwala, and Pemba in southern Zambia), Insurance and Madison Insurance).
supported by the Swiss Agency for Development and
Cooperation’s (SDC) Regional Office for Southern It was agreed to use the WFP supported approach
Africa , the Korea International Cooperation Agency to develop new windows to target the most
(KOICA) and the Green Climate Fund . The intervention vulnerable timings across the FISP portfolio. This
has reached 18,083 farmers with an integrated risk is because, although the current FISP product has
management approach, including conservation smooth coverage across the growing season, it
agriculture, risk transfer (index insurance) and risk does not have a mechanism for tuning coverage to
retention (savings services). Following five consecutive target the times that have the most vulnerability,
seasons of offering insurance, practical and technical and this happens to be one of the strengths
FISP INSURANCE INDEX PRODUCT IMPROVEMENT | TECHNICAL REPORT 2
of the WFP supported index. IRI provided its (and perhaps other parameters) for each zone. This
tools and processes to support the Zambian process was undertaken in early 2021, resulting in
Government and local stakeholders to map out potential indexes for the whole country developed by
zones across the country, assemble official data the technical working group. Now that the product is
sources, perform strategic sampled site visits, and developed, the technical working group will be able
support the “technical working group” perform to make informed decisions about what commercial
the parameter optimization to reflect the most rollout choices to make.
vulnerable periods and hence best windows
Objectives
• Provide support and recommendations towards WFP’s engagement with the newly formed Index
Design Working Group and risk takers;
• Provide support in assessing key parameters that can help optimize the burning cost for Zambia;
• Initiate training of index design working group, including: i) Introductory training on index design and (ii)
training on newly developed index design building blocks. Development of a detailed training roadmap,
including a workplan for the current year, with an objective of final handover of the index design process
to the working group in the coming years will be required;
• Support efforts to operationalize tools for digital data collection for design and monitoring, as required;
Milestones
• Finalised ODK forms for index design data collection
• Completed operational index drafts and description
• Completed joint workplan for blended index design developed together with GRZ’s technical service
provider
• Held capacity building training for Index Design Working Group and kick-off of blended product
development
• Completed draft blended index and description
FISP INSURANCE INDEX PRODUCT IMPROVEMENT | TECHNICAL REPORT 3
Key Achievements
and Findings
Crowdsourced Data Collection Trainings and Workshops
In early 2021, IRI supported WFP and the Government IRI conducted a week-long workshop in March 2021 on
of Zambia on a crowdsourced data collection exercise index insurance design principles, which included key
spanning almost 1,000 camps over the entire country of stakeholders from the Government of Zambia as well
Zambia. In this exercise, focus groups of farmers were as FISP’s insurance partners. At the conclusion of the
asked about their cropping practices and historical workshop, participants agreed on a way forward for the
risk years - critical data which informed the improved design of the 2021/22 FISP index insurance product.
design of the index insurance product.
IRI also held a week-long workshop for the inter-
Thanks to the Ministry of Agriculture’s support, this ministerial technical working group team in April 2021,
crowdsourcing exercise was among the largest ever in which participants worked through key design
conducted, with an estimated ~300 MoA extension decisions related to the index. The technical design
officers carrying out the surveys. With their support, team has also held biweekly meetings as the project
the FISP programme was able to gather data for the progresses.
entire country - including many remote rural areas - in
a matter of weeks. IRI’s cloud-based interactive design tools - described
below - were embedded into these training and
This crowdsourced data has been reviewed twice, workshop exercises, so that participants could work
first by the Inter-ministerial technical working group in through key aspects of the index design process
Lusaka and again by the original MoA district staff who themselves.
collected the data. This rigorous review process, which
used IRI’s interactive tools, ensured that the farmer Insurance Index Improvements
data used for index design was of high quality. IRI has worked with the inter-ministerial technical
working group to create a “blended” insurance product
FISP
FISP INSURANCE
INSURANCE INDEX
INDEX PRODUCT
PRODUCT IMPROVEMENT
IMPROVEMENT |
| TECHNICAL
TECHNICAL REPORT
REPORT 4
4
for the 2021/22 season, reflecting both the successful the cost of seasonal monitoring financially sustainable.
aspects of the current product as well as best practices For example, IRI is developing Whatsapp-based tools to
that IRI and WFP have developed over years of the R4 collect key seasonal monitoring data from farmers and
project. extension officers.
Specific design principles that IRI and the technical Tools Developed
team have applied to improve the index include: To support the activities described here, IRI developed
a number of open-source, cloud-based data collection,
1. Using crowdsourced data from farmers to tune management and visualization tools for the FISP
the index to better reflect local conditions, technical team. These tools include:
2. Combining satellite data, farmer reports and
MoA agroecological zone classifications to 1. Mobile survey instruments for collecting
identify the dominant perils in each district: crowdsourced data from farmers,
Drought, excess rainfall, or both, 2. A web platform for visualizing and cleaning
3. Introducing a more transparent, uniform farmer data on historical bad years,
structure for pricing the index and calculating 3. An interactive map which allows users to visualize
triggers and exits, various sources of climate and agroecological
4. Building simple, open-source interactive design data, and designate their preferred zones of
tools to help local experts work through key coverage for insurance accordingly,
decisions on all of the above. 4. An index insurance design tool which allows
users to tune the parameters for the insurance
Seasonal Monitoring product for each district of Zambia and compare
Moving forward, IRI will work with the inter-ministerial the results against multiple sources of risk
technical working group to develop regular processes exposure information,
for seasonal monitoring that can work on a national 5. A consolidation tool to view many users’
scale. The goal is to build processes which can be proposed index parameters and arrive at a
integrated into existing MoA activities and which keep consensus decision.
FISP
FISP INSURANCE
INSURANCE INDEX
INDEX PRODUCT
PRODUCT IMPROVEMENT
IMPROVEMENT |
| TECHNICAL
TECHNICAL REPORT
REPORT 5
5
WEATHER INDEX INSURANCE
ENHANCES THE RESILIENCE OF
ZAMBIAN FARMERS
Mr Borniface Haweza, a smallholder farmer
from Pemba District in Southern Province
As climate change takes hold, increased erratic weather patterns
are negatively impacting agriculture and threatening livelihoods
and food security in Zambia. The most vulnerable are the 1.5 million
smallholder farming households who are predominately dependent
on rain-fed agriculture.
Mr Borniface Haweza, a smallholder farmer from Following the
Pemba District in Southern Province, is one of the many drought in
smallholder farmers that suffered a total loss of crops the 2018/19
due to climate shocks. ‘’In the 2018/19 farming season, agricultural
we had very little rain. I planted my crops in December, season, each eligible smallholder farmer received an
but there was no rain until the end of January. Every day, average pay-out of ZMW 620, facilitated digitally through
I would go to my field to weed with the hope that it would MTN mobile money wallets. In total, ZMW 5,489,567 was
rain. Unfortunately, it didn’t,’’ said Mr Haweza. distributed.
‘’It was painful to see our little maize crops dry up in front ‘’Weather index insurance helps stabilize smallholder
of our eyes. I had invested over ZMW 8,000 worth of farmers income – allowing them to continue farming
inputs, only to recover ZMW 200,’’ explained Mr Haweza. regardless of disaster and weather uncertainties. As
producers of 80 percent of the domestic supply of
To protect farmers like Mr Haweza from crop losses food in Zambia, this is crucial to ensuring food security
due to extreme weather events, WFP is helping farmers in the country,’’ said Mr Derrick Ndimbwa, Climate Risk
access weather index insurance. Management Officer.
Like many other farmers affected by the drought in
Weather index insurance is an innovative approach to the 2018/19 season, Mr Haweza used his pay-out
managing climate related risks using a pre-defined index, productively, buying fertilizer, livestock feed and seeds to
such as rainfall, to determine pay-outs. The financial pay- ensure he had access to the inputs needed to continue
outs, provided by Mayfair Insurance, help smallholder his livelihood activities.
farmers to recover their investment losses resulting
from weather related events. To increase uptake of weather index insurance in Zambia,
WFP is providing technical assistance to the Government
To date, WFP has supported over 7,800 smallholder to improve the design and management of the insurance
farmers from Southern Province to take up weather index provided under the Farmers Input Support Programme
insurance, by contributing 75 percent of the premium. (FISP). WFP is working with the Government to ensure
FISP INSURANCE INDEX PRODUCT IMPROVEMENT | TECHNICAL REPORT 6
that the insurance offered takes into consideration of a phone app to allow farmers to voluntarily pay their
smallholder farmers’ needs. Furthermore, WFP is insurance premiums and receive pay-outs. WFP has
working with Smart Zambia Institute to see how the also developed training manuals and radio messages
digital payment platform for facilitating insurance pay- on weather index insurance in seven local languages
outs can be enhanced for the FISP programme. With this to sensitize and encourage farmers to insure against
initiative, WFP hopes to see weather index insurance climate risks.
services extended to the one million smallholder farmers
on FISP across the country. Recognising that farmers may also suffer from livestock
losses during shocks, WFP collaborated with the Ministry
Additionally, WFP is working with private agricultural of Fisheries and Livestock and IFAD to launch livestock
companies (Pula Advisors, ZEP-RE, MTN and Mayfair index insurance, expected to reach an estimated 600,000
Insurance) to improve the design and management of livestock farmers across the country.
private insurance schemes, including the development
FISP INSURANCE INDEX PRODUCT IMPROVEMENT | TECHNICAL REPORT 7The Ministry of Agriculture, IFAD
World Food Programme
and WFP, with support of the
Plot 10/4971, Tito Road, Rhodes Park, Lusaka, Zambia
International Research Institute
T + 260 211 253802, 250407, 252955 for Climate and Society (IRI) and
Co.Zam.Communications@wfp.org financial partners Mayfair, Zep Re
wfp.org and ACRE
Photos: WFP/photolibraryYou can also read
